CITs, which are a type of common law trust, can have a number of advantages over mutual funds. Generally, CITs can be set up more quickly than mutual funds and can also be less expensive to maintain. In particular, CITs are structured to be exempt from registration as an “investment company” (whereas mutual funds must register as investment companies). Additionally, CITs have more streamlined governance than mutual funds. CITs can also hold a larger percentage of illiquid assets, such as restricted private equity interests or commercial real estate buildings, than a mutual fund. This can make CITs attractive to longer-term investors who do not need the daily valuations and redemptions of mutual funds.
